Can my pay be changed to a percentage of the grossfrom a straight salary?

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Can my pay be changed to a percentage of the grossfrom a straight salary?

I’m a senior manager and my pay was recently changed from a weekly salary to a set percentage of the gross profit based on our annual sales of 2.1 million. This pay is strictly based on the performance of the weekly cost of goods that affect the gross profit. Is paying a manager that spends the majority of his time in the office performing administrative duties and supervising employees a percentage of the groff profit legal?

Asked on October 15, 2011 under Employment Labor Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

The answer is it may be legal if you meet the requirements for exemption from the overtime provisions of the labor laws (like the Fair Labor Standards act) and also will earn an amount at least equal to minimum wage for the amount of hours you work. That's because the law does not care *how* your pay is calcualted: only that you get paid at least minimum wage and that if eligible for overtime, you get that when appropriate. So, to take a deliberately silly example, if you were the VP of a fitness chain, you could be paid $1 for every push-up you do, as long the pay meets the criteria above. That's not to say that it's necessarily good for you, what the employer did, but it may be legal.


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